The year was 1977, and a film-school graduate named Daniel Miller sat down with a budget synthesiser and a copy of JG Ballard's Crash to write a song. With its whip-crack beats, spidery synth, and lyrics about feats of sexual congress conducted in the mangled remains of a car accident, Warm Leatherette didn't exactly scream hit-worthy potential. Twinned with the equally grisly TVOD ("I don't need a TV screen/I just plug the aerial into my skin") Miller planned to release just 500 seven-inch singles under the name the Normal.

But while shopping a test pressing around prospective retailers, Miller met with an unexpected response. First, Rough Trade asked for 2,000 copies. Next, music newspaper Sounds got hold of a white label and reviewed it as "Single of the Century". It went on to sell 30,000 copies, and soon, because Miller had put his address on the back of the record, mail started arriving – letters and demos. A tape by fellow synth obsessive Fad Gadget caught Miller's attention, so he decided to release it. And with that, Mute Records was born.

Summing up the legacy of one of the UK's biggest independent labels is tricky, and with Mute, it's doubly so. They were a punk label, inspired by the movement's DIY and Year Zero spirit. But their first wave, the likes of Fad Gadget, Robert Rental, and Miller's new pseudonym Silicon Teens, rejected traditional rock'n'roll instrumentation in favour of progressive rock's favourite tool, the synthesiser. It was a label capable of huge, commercial pop (Depeche Mode, Erasure and Vince Clarke's Yazoo were making some of the biggest-selling electro-pop records of the 80s) but all the while, Mute was fostering determinedly abrasive outfits like Los Angeles free-noise group Smegma, or Boyd Rice, a Satanist and prankster who toyed with mangled tape loops and dark ambience under the name NON. And Mute could not really be considered "a synthesiser label" – the Birthday Party dealt in raw, gutter-dwelling post-punk, while initially Einstürzende Neubauten dispensed with traditional instruments altogether, playing on scrap metal and rudimentary electronics.

Mute's signing policy seemed to be determined purely by Miller's personal taste, acts towards whom he felt some sort of affinity. "It all fits together in my head, but almost every time we sign a band, whether it was the Birthday Party or Erasure, people would say 'That's a bit weird for Mute,'" Miller explains in the liner notes to Mute Audio Documents 1978-1984. "I like to think the one thing that unifies all Mute artists is that they have a highly developed sense of humour. The darker the artist, the more highly developed the sense of humour."

In 2002, Mute was bought by EMI, with Miller becoming executive chairman. The label has been a little quieter of late, leaning on reissues (a string of Bad Seeds ones are imminent) with more recent signings – Richard Hawley, Maps, Polly Scattergood – apparently a little more conservative than the label's electro pioneers. Still, it's worth remembering that forward-thinkers can look off-trend. Signing electro-pop chanteuse Alison Goldfrapp back in 1999 might have looked like a straightforward commercial move. Ten years on, with Little Boots and La Roux topping the charts, you've got to wonder if there's not just a little bit of prescience at play.

Overlooked Mute gems

Fad Gadget – The Fad Gadget Singles (1986)Perhaps Mute's most cruelly overlooked figure, the early singles by Frank "Fad Gadget" Tovey were among the finest in early electro-pop, strange concoctions of corrosive synthesiser, monotone vocals and bleak sci-fi imagery that still sound great today.Moby – Everything is Wrong (1995)It seems a world away now, but before Richard Melville Hall wrote melancholy music for car advertisements, he was surprisingly good at writing candy-coloured rave tracks. If you can listen to the jungle-inspired Feeling So Real and not feel a little bit cheered, you are dead inside.Add N to (X) – Avant Hard (1999)The future might have been digital, but London electro-punks Ann Shenton, Barry 7 and Steve Claydon begged to differ, spearheading the vintage synth revival with blistering techno-porn tracks like Metal Fingers in My Body.